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Friday, 25 November 2011

Cynicism is bad for business

When someone we trust takes us for a ride, the bump back to earth is something we're unlikely to forget. But when we suspiciously reject an offer from someone else, we may never know what we've missed out on due to too little trust. Over time, such asymmetries in feedback can tip us toward an unwarranted cynical stance. It's clear that cynicism is as unhelpful a bias as naivety: it leads to guarded communication, reduced sharing, and more self-serving biases, all of which may cause interactions to nosedive. A recent review by Chia-Jung Tsay and his team from Harvard Business School may help us understand cynicism and how it develops.

The review identifies some key triggers that enhance cynicism, including:

Being new to negotiation - novices are more likely to believe that negotiation is always competitive;

Thinking about the power of influence; for instance, knowledge that another party is a sales expert leads negotiators to suspect their offers more;

Inclusion of a shady character - negotiating groups take the least trustworthy individual in the other group as the best indicator of group trustworthiness;

Clear power asymmetries - people expect more misrepresentations from authorities with access to hidden information.

The authors point to a range of studies where participants reject offers that are in their rational best interest because of lurking cynicism that puts them off the whole venture. They warn us that the consequence is that "cynicism regarding others' motivations may become a self-fulfilling prophecy that leaves both sides worse off than would otherwise be the case." Happily, the review concludes with some advice we might take on to chart a better course:

perspective-taking to recognise your 'opponent' is an active party in negotiations, cultivating a "healthy skepticism" that considers a full range of motives on their part;

act with integrity - it increases the likelihood the other party will;

encourage a level playing field that minimises hidden information;

foster repeated exposure to specific negotiators to build a history of trust that is costly to undermine.